FINANCIAL DEEPENING AND ECONOMIC GROWTH IN NIGERIA
ABSTRACT
This study examines Financial Deepening and economic growth in Nigeria for the period of 1981-2016.. The key objective of the study is to evaluate the extent to which Financial Deepening has affected Nigeria economy. Ordinary least square was used as a method of data analysis.. The study used secondary data, collated from Central Bank of Nigeria Statistical Bulletin various years. The variables were on ratio of credit to private sector to GDP, ratio of money supply to GDP, ratio of market capitalization to GDP, ratio of financial savings to GDP and real gross domestic product. The researcher employed unit root test, stability test, causality test, co-integration, and Error Correction Model (ECM). The study reveals that there is a significant and positive effect of Financial Deepening and economic growth in Nigeria. It was observed that the ratio of credit to private sector to GDP (CPS/GDP) has a positive sign and statistically insignificant. It was also observed that ratio of money supply to GDP (MS/GDP) has a positive sign and it’s statistically significant. Ratio of Market capitalization to GDP has positive sign and it’s statistically significant. The study concludes that financial deepening has significant effect on economic growth in Nigeria The researcher recommends that, Government should promote micro finance sector of the economy so that the small entrepreneurs may have easy access to credit availability. Policy makers should encourage the monetary authorities like central bank of Nigeria to reduce the interest rate in the economy so that investors may raise their investments and the country’s productive capacity.